A survey of legislation affecting the coconut industry of the Philippines

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Part of The Coconut Journal

Title: A survey of legislation affecting the coconut industry of the Philippines
extracted text: • Conmut k!li11lltivn /rv111 iiH: Cvcvmrt J>rvdmts Uoard to tbe 7VIl!it>lll11 Coco11Hf Corporatio11. A SURVEY OF LEGISLATION AFFECTING THE COCONUT INDUSTRY OF THE PHILIPPINES By MARIA ABALAJON No Legislation on Coconut During Spanish Regime During the Spnnish regime in the Islands, the coconut industry had not assumed so important a role as to be the subject of monopoly, as was the tobacco in dustry, by the Royal Government of Spain. Although the copra production and exportation of the Philip pines contributed in an appreciable measure to the cof fers of the Spanish Government, there was no parti cular legislation on the coconut industry. the establishment of fadories for the extraction of co conut oil, or fot· other industries derived from the coco nut, or for the utilization of their waste products; and (3) to organize corporations or cooperative socie ties among the owners of the coconut plantations in order to facilitate the accomplishment of the mention ed objectives. To attract coconut planters and producers the Co conut Products Board waB empowered to guarantee However, upon the implantation of American sov ereignty in the P h i I i p pines in 1899, the condi tions for copra production and ex portation changed. The wide avenues of the vast Amer ican markets were opened to.our co conut producers and planters. The demand for our copra and coconut Governor Tomas Confesor with the NCC Directors. Left to right, Director Ramon Soriano, General Manager Rodriguez, Governor Confesor and Director Benito Razon. to the concern constructing a co pra drier or fac tory for the ex traction of coco nut oil, or· for the utilization of co conut by-products, the payment of the value of its plant and equip ment, :md interest thereon out of the fu 11 d to be creat ed by a deduction from the net pro fits of the tranoil exportation increased by leaps and bounds and reached its peak during the enti1·e period of the First World War. During this time the Philippines was suplying the whole world with one-fourth of its copra consumption. The Coconut Products Board But although we were heavy producers of copra, we were not selling the best quality. Ceylon and In dia were producing copra of better quality. To remedy this deficiency, the now defunct Philippine Legisla ture saw for the first time the need of legislation in that direction. Act No. 2598, passed on Feb. 4, 1916, was the first major legislation affecting the coconut industry. Its comprehensive objective was to en courage the improvement of coconut products, both in quality and in variety. The Act established the Coconut Products Board t:omposed of the Governor General, the Speaker of the Philippine Assembly, or their authorized representa tives, and one member appointed by the Governor Gen eral with the advice and consent of the Upper House of the Philippine Legislature. The primary dutie;; of the Board wet·e threefold: ( 1) to improve produc tion of copra by aiding in the establishment. of copra driers in suitable places and bringing the producer:> in touch with the consumers or exporters in order to enable the former to determine the quality of copra in demand in the market; (2) to promote and aid in sactions of the drier or factory to be deter mined by the Board, which fund would be suf ficient to liquidate the capital invested therein in :w years or less counting from the date on which su<·h dt·ier o1· factory has begun operation, and to providt• for the proper annual interest thereon. Any surplu� in the fund would be distributed proportionately among the owners of the land and coconut.._, with whom the concern operating tr.e drier or factory had en h•rpcJ into any contract, provided, that such swarantee would be granted only on condition that the drier or factory would finally become the property of the owners of the coconut land. The board was also empowered to purchase, from a corporation or corporations compoHed of owners of land planted in coconut trees, bonds iHsued upon tht• security of the property of said corporation, or upon the security of the first mortl!ages upon the lands or part of the lands of individual owner� who an� sto<-k holders in the said corporation, or upon both Het:uritit·s mentioned; and to make loans secured by first mot-t gage to a corporation or corporations owning anrl operating a drier or factory already eHtabli!lhed for addition.'i and improvements th!:'reto. However, bt• fore such purchaHe of bonds could he made, the Coeo nut Products Board muHt exact from the Corpora.tiou certain conditions which amony othi!l"X are: (a) t.hal the amount of bonds issued by the corporation sh;dl not exceed 60 '/c. of the value of the property offpred AUGUST, 1941 as security; (b) that before such purchase be made such corporation should have contracts with the own ers to delivet· and sell to the corporation all the coco nuts produced on their land or copra made from said nuts, and to convey to the corporation such rights of way that the corporation might deem necessary for roads and railroads connecting the drier or factory with the field; (c) that the majority of the owners of said lands should be stockholders in the corporation which should provide for a sinking fund to be de poRited with the Insular Treasury for the retirement of the bonds; and that the payment for the retirement of the bonds would have preference over any divi dends or profits of the stockholders and would be suf ficient for the total extinction of the bond debt within a period not exceeding 20 years; and that until all mo ney sufficient to pay the same has been safely de posited for the purpose with the Insular Treasurer, no dividend in excess of 10% per annum would be paid the stock of such corporation, and the net earnings, over and above said dividends, should be used in bet ter·ments of. additions, or improvements to the pro perty offered as security, or in the redemption of the bonds of such corporation. It was further provided that the Board should not make any loan except upon first mortgage on the drier or factory and the land or part of the land of the corporation, o1· both, and only for a sum not to exceed 60% of the value of the property offered as security, and that the corporation would provide for the payment of an annual installment on said loa.•z, such annual installments to have preference over any dividt>nds or profits of the stockholders and to be Student spinners at work in the Marinduque sufficient to prm•ide for the total extinction of the debt within a term not exceeding 20 years. In line with the proper discharge of its powers, the Board was authorized among other things to enter into negotiations with, receive propositions from, and make contracts on behalf of the corporation, taking advantage of the benefits of the act, with the cons tructing firms or concerns engaged in the establish ment of coconut driers or factories fo1· the extraction of coconut oil, or for the utilization of the waste pro ducts of said driers or factories; to demand that the minimum production of coconuts necessa1·y fot· the sound economic operation of the drier or factory be guaranteed; to establish rules and conditions under which it would furnish aid to the ow:ners of coconut driers or factories for the extraction of coconut oil, or fm· the utilization of the waste products of said factories; to make proper provision for the training of technical supervisors, employees, and laborers, who may take part in the work of a drier or factory receiv ing the benefits of the Act. The Board exercised supervision over the driers or factories constructed or operated under the· Act. But this supervision terminated when the capital and interest invested by the government had been paid off and the government thereby completely disengaged itself from the obligation contracted in connection with the guarantee granted by it. In the particular case of the purchase of bonds or of a loan granted to the corporations taking advantage of the benefits of the Act, the Board had the right to appoint a person who would have a direct hand over the operation of the drier or factory and whose compensation as fixed by the Governor General were paid by the corporation concerned. The bonds of any drier or factory were subject to examination by the Bureau of Audits. It was the duty of the Board to report to the legislature at evenJ session the result of its work, setting forth among other things, the names of the driers or factories which received government aid, the sum invested for each, the sum received for the payment of the capital and the sum owing therefor, the interest paid and owing, and the losses or profits of each drier or fac tory. Coconut School of the N.C.C. The Act provided that except by permission of the Board, no owner of land o1· of coconuts which had con tracted for a dl"ier or factory may, within 25 years from and after the date of the contract, give, sell, alienate or in any other manner dispose of, or engage his production of coconuts to any person other than the drier or factory, and likewise, no proprietor of land under contract with a drier or factory may, within 25 years from and after the date of the contract, give, sell or alienate, o1· in any other manner dispose of, or en gage his property without the consent of the Coconut (Please tu1·n to pauc 50) Page 85 COCONUT LEGISLATION (Colltillltt'd- from pa,ye 3i) Products Board. Penalty for Coconut Thieves At the time that Act No. 2598 was enacted ano ther measure was also passed to curb the rampage of thieves and despoilers on coconut lands, which had fast become an extreme annoyance to coconut land owners. This was Act No. 2609 which penalized a person who gathers two or more coconuts that have fallen or been left on the ground, or t-akes them off the trees without the knowledge and consent of the owner, or steals them in any other manner, or cut the :voung nuts or the trunks of coconut trees, in order to appropriate their nuts to his own use and consump tion. The Act provided that the penalty was that found in Article 518 of the Old Penal Code, later in corporated in Article 310 of the Revised Penal Code as amended by Commonwealth Acts Nos. 273 and 417, Section 2, under the offense described as quali fied theft. Legislation to Combat Coconut Pests In 1933 the coconut leaf-miner presented a vicious threat to the coconut plantations throughout the Phil ippines. This necessitated the prompt passage of Act No. 4047 on February 18th of that year. This Act a-uth01ized the Director of Plant Industry, subject to the approval of the Secretary of Agriculture and Com merce, to use such amount from the 1"200,000 already appropriated under Act No. 3924, as may be neces sary to accomplish the destruction and eradication of the coaonut leaf-miner and other pests and diseases of coconuts. The pests wrought such havoc on the coconut plantations that the industry did not feel the imme diate adverse and harmful effect of the U.S_ Re venue Act passed the following year, because of the greatly decreased exportation of coco-oil. This Act, which took effect on May 10, 1934, imposed a tax of 3 cents on every pound of oil extracted in the Phil ippines or in the United States from copra of Phil ippine origin, and 5 cents on every pound of oil ex tracted from copra of foreign origin. The Philippines, however, regained its enviable position of preference when the U.S. Revenue Acts of 1935 and 1936 which amended the previous revenue act by inc1·easing the original rates of tax imposed on some of the oils were subsequently passed, to the advantage of the Philip pine Coconut Oil. Toward the extermination and control of locusts, bud-rot, and other coconut pests, the need for legisla tion was not felt until 1936 when Commonwealth Act No. 110 was enacted on October 30, 1936. This Act created an appropriation of PlOO,OOO.OO to be spent for carrying out the campaign against those pests and diseases. Under the Act, the Secretary of Agriculture and Commerce shall submit to the National Assembly within 15 days from the opening of the coming ses sion a report giving a detailed information as to the manner the amount appropriated has been spent, as well as the results thereby accomplished. Any un expended balance of the fund appropriated shall re vert to the Philippine Treasury on December 31, 1937. Page iiO The COCONU'),' JOt"RNAL Acts of Congress Immediately after the termination of the first World War, there followed a slight decline in our ex portation of copra and coconut oil as the demand for their use lessened. But it was not until the years from 1920 to 1922 that our exportation of copra and coco nut oil to the United States became alarmingly re duced. The chief cause of this heavy downward trend was the passage of the Emergency Tariff Act of 1921 by the U.S. Congress, which imposed a duty of 20 cents on every gallon of our coconut oil. As a result, several coconut oil mills in the Philippines were forced to shut down. However, the coconut industry was saved from total liquidation by the timely passing- of the U.S. Tariff Act of 1922, which repealed the prior Act and imposed a duty of 2 cents only on per pound of Philippine coconut oil, giving pt·eference, therefore. to the Philippines by excluding imported coconut oil from foreign sources other than the Philippint>s. Coconut Included Among Staple Crops Act No. 3443 was enacted on November 28 1928 appropriating the sum of 1"50,000 to finance the ' estab � lishment and maintenance of seed farms. This Act was amended the following year which provided for additional funds in order to extend the operation of the former act to include the establishment and main tenance of experimental stations. It is noteworthv that the coconut was not included in the enumeratio;t of staple . crops primarily mentioned in the foregoing acts. Thts was, perhaps, due to the fact that the coco nut industry as previously stated was not greatly af fected by or suffering from the economic depression prevalent the world over. It was only on November 29, 1932, when Act No. 3944 was enacted to amend Act No. 3443 by including the coconut in the rank and file of rice corn, sugar cane, abaca, etc. that coconut fell within the meaning of staple crop. This Iatet· Act provided for another sum of 1"50,000 to be used in the establishment, maintenance, equipment, and opera tion of seed farms and experimental stations for the purpose of raising selected and pedigreed seeds of the enumerated staple crops to be distributed to the farms throughout the Archipelago. During the Commonwealth, the coconut having al ready been considered a staple crop, Commonwealth Act No. 50 passed on October 14, 1936 provided for the establishment, operation, and maintenance of warehouses for copra and, if space is available, other marketable products. Under the Act, the Secretary of Agriculture and Commerce, the Philippine National Bank and the National Development Company may, under such rules and regulations as they will pro mulgate, charge reasonable rate of fee.<> for deposits made in the warehouses established by them under the Act. For this purpose they are directed to ac quire, by lease or otherwise, suitable warehouses in place where, in their opinion, the establishment and operation of such warehouses are justified, and they may employ the services of any officer or employee of the government with the approval of the respective Department Head, or if such officer or employee is not available, they may employ the services of any other suitable person for the operation of t.. ware houses. Any officer or employee or person in charge Officials and stu dents in the Marin duque C o c o n u t School for Home In dustries of the Na tional C o co c onut Corporation. of any of the warehouses created under this Act shall have the privilege of being bonded in the Fidelity Fund. The Philippine National Bank and the National Development Company were directed to invest out of the funds under their control such amount as may be needed for the establishment, operation, and main tenance of the warehouses with such arrangement as may be agreed upon between them and the Secretary of Agriculture and Commerce. Upon the request of a municipality, the latter may acquire and operate any of the warehouses located within its jurisdiction and establish, operate and maintain the same in accord ance with Acts numbered 3929 and 3932 and under such arrangements as may be agreed upon between said municipality and the government institution and authot·ities concerned for the reimbursements of the money invested in the establishment of the said ware· houses. The Tydings-McDuffie Law on the Coconut Rejection of the Han�-Hawes-Cutting Act by the Philippine Legislature resulted in the passage of the Tydings-McDuffie Law, known as the Philippine In dependence Act. The provisions of the rejected Act affecting the coconut industry were wholly incorporated in the lat ter. According to the Tydings-McDuffie Law, there shall be !ivied, collected, and paid on all coconut oil coming into the United States from the Philippines, in excess of 200,000 long tons, in any calenda.r year the same rates of duty which are required by the Jaws of the United States to be levied, collected and paid upon like articles imported from foreign countries, and in case the limit has been reached, th,e amount or quantity of coconut oil shall be allocated, under ex port permits issued by the Government of the Com monwealth, to the producers and manufacturers, on the basis of their exportation to the United States in the preceding year. Moreover, the Government of the Commonwealth shall impose and collect an export tax on the exportation of coconut oil entering the United States free of duty, i. e., within the limitation of the quota of 200,000 long tons, beginning and during the 6th year after the inauguration of the new gov ernment, at 5% of the rates of duty which are re quired by the laws of the United States to be collect ed and paid on like articles imported from foreign countries; and thereafter at a yearly progressive in crease of 5% on the rate of the preceding year, until the expiration of the 9th when the export tax shall be at 25 c�. The Tydings-Kocialkowski Act Nevertheless, by the passage of the Tydings-Ko cialkowski Act, otherwise known as the Philippine Economic Adjustment Act, on August 7, 1939, the economic provisions of the Tydings-McDuffie Law affecting the copra, coconut oil and other products ex ported to the United States were to a great extent amended. According to this later law, no export tax is to be imposed and collected upon coconut oil and copra, without however exempting the quota of coco nut oil from the excise tax provided in Section 2470 of the Internal Revenue Code. The amending law took effect on November 15, 1940, and shall end on .July 4, 1946. The aforementioned Jaw reaffirms the quota of 200,000 long tons provided in the Tydings-McDuffie Law for the year 1940, and furthermore, provides that for each calendar year thereafter up to calendar year 1945, said annual quota shall be the same as the cor responding quota for the year immediately preceding, less 5% of the corresponding original quota, and for the period from January 1, 1946, to July 3, 1946, the <OtnU4l quota shall be one-half of the corresponding quota specified for the calendar year 1945. Act Establishing the National Coconut Corporation The following year, the National Coconut Cor poration was created by Commonwealth Act No. 518, approved by the National Assembly on August 7, 1940. It is subject to the provisions of the Corporation Law in so far as they are compatible with the provisions of Act No. 518, and enjoys the general powers men tioned in the said Corporation Law in addition to the �pecified powers mentioned in Act No. 518. The Na tional Coconut Corporation is managed by a Board of Directors appointed by the President of the Philip pines with the consent of the Commission on Appoint ments of the National Assembly. According to this Act, the National Coconut Cor poration shall have the following objects: (a) to es tablish, keep, maintain, and operate, or help establish, keep, maintain and operate drying plants, or copra driers, or coconut centrals with a view to adjusting the coconut industry to a position independent of trade preferences in the United States and to provide faci lities for the better curing of copra products and the proper utilization of coconut by-products, provided, that no subsidy, direct or indirect, shall be paid to producers or processors of copra, coconut oil, or allied products; and (b) to afford facilities for bona fide production loans to Philippine coconut planters and copra producers. To carry out the foregoing purposes, the afore said corporation is empowered and authorized: (a) to grant bona fide production loans to Philippine copra producers upon the security of coconut crops or pro ducts; and (b) to buy, sell, assign, establish or operate rent or lease presses, warehouses, buildings, and any other equipment and materials necessary and proper to carry out its purposes. In accordance with the Ty dings-Kocialkowski Act, a special fund known as the "Coconut Industry Fund" was created by appropriat ing a certain amount out of the Coconut Oil Excise Fund collected on and after January 1, 1939. The to tal sum available to the corporation for the accomplish ment of its undertaking shall not exceed P20,000,000.00. The Coconut Products Board and the National Coconut Corporation Compared It is significant to note that the purposes for which the National Coconut Corporation has been or ganized are in general parallel to those of the Coconut Products Board of 1916. A notable divergence, 'how ever, lies in the fact that in the former organization the principal objective was superiority of coconut pro duction, while the one recently established, while not neglecting to place emphasis on the quality of produc tion aims principally at securing for the industry a position independent of trade preferences in the United States. P��.ge 52 The COCONUT JOURNAL FIBER FROM ... (continued from page IS) a pure building board, although it resembles lumber wallboard in many respects. It is a composition board made essentially from wood or any other ve getable fibers by a process of felting in which count less fibers are interwoven and matted to form a ri gid product. In other words, it is a synthetic lum ber in which strength, resistance to moisture and fire, insulating and acoustical properties have been built in. It is a new material, an insultaing lum ber, rather than a mere substitute for wood. Millions of square feet of it are produced annual ly to satisfy demands that its originators never fore saw. It has been given qualities in a wide variety of combinations to serve specific purposes. It enters primarily in the manufacture of cabinets, marine partitions, railroad coaches, toys, in trailers and mo tor vehicles, air-conditioning, refrigeration, theaters, etc. As a building material, fiber board is notable in its handiness and ease of application. It presents no waste, since they are delivered in specific sizes and contains no knots, sappy pieces or cross-grains. More over, its close texture renders it resistant to attacks from insect vermin. Two distinct objects of paramount importance at·e solved in the fiber board industry, namely : ( 1) the manufacture of a substitute building board material having a large unit surface area which consequent ly reduces handling and installation costs, and ( 2) the utilization of waste fibrous products. Fiber boards can be classified into two different groups-(!) the homogenous and (2) the laminated. Under the former class, sometimes called the uniforlll consistency board, are found the insulation and acous tical boards. The latter class which is a board built up from several layers to impart strength includes the composition boards used for flooring, cabinets, rail road coaches, etc. Manufacturing Process The process of board making as practised by many manufacturers today, is based upon the prin ciple of " felting" or the production of a rigid board of interlaced fibers. The treatment, however, is some times modified according to the kind of raw mate rials used and products desired. Generally, the raw material is subjected to a mechanical or chemical pulping process suffi.:ient to loosen incrusting casing materials for the fi�ers, but not to reduce the fibers into pulp. The fibers are recovered, washed, refined and finally pumped into a stock chest which feeds the molding machine. From the board machine, the wet board formed passes thru a series of rollers, suction boxes, and finally under powerful presses, whence it is taken to a long continuous drier. Sometimes, however, instead of the long continuous drier, the wet board is cut to specific sizes and loaded into a platen-press, the number of plates varying as to the numror of hoards pressed at one time. The driers deliver bvardH which are nearly bonedry and are, therefore, either treatec' in a humidified or simply sprayed with water to bring its moisture content in equilibrium with the moil! ture content of the air, thus insuring minimum of swelling and shrinking. The finished boards, after rigid inspection, are stored away ready for deliv ery .
Date: 1941
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